UBS trading scandal investigation finds risk systems ignored
06 October 2011 | 12408 views | 3
Risk systems did pick up suspect activity at UBS related to the recent loss of $2.3 billion through unauthorised trading but the information was not properly acted on, according to an internal investigation. Meanwhile, the bank's co-heads of global equities have resigned over the scandal.
In a memo to staff quoted by the Wall Street Journal, UBS interim chief executive Sergio Ermotti say: "Risk and operational systems did detect unauthorised or unexplained activity but this was not sufficiently investigated nor was appropriate action taken to ensure existing controls were enforced."
London-based trader Kweku Adoboli has been charged by police in connection with the losses but the wider fall-out continues, with Francois Gouws and Yassine Bouhara, co-heads of global equities handing in their resignations.
In a statement, UBS says the "resignations come as they [Gouws and Bouhara] assume overall responsibility for the effective management of the equities business".
The pair are replaced by Mike Stewart, whose arrival from Bank of America Merrill Lynch was already sealed before the scandal broke.
With the bank confirming that there will be disciplinary action taken against other staff, the WSJ claims that eight equities people, including the unit's two COOs and front office staff, have been suspended pending the outcome of the investigation. Action against employees from risk-control and operations is also expected.